Heat Treating in the AI Generation: How Technology, Expectations, and Market Trends are Demanding Change By Janusz Kowalewski, Osaka, Japan.

As we enter the fourth quarter of 2024, companies start to look back. What were the trends that affected overall sales? Where did we see growth? They also look for ways to maximize the short term. How do we meet our final sales and production goals before the year ends? What are the key opportunities we need to take advantage of right away?

The global heat-treating market is poised for significant changes in the coming years, and our industry needs to step up its game. In this article, I want to address the first three key factors driving these changes and how our industry must adapt to meet the coming market pressures. The three additional factors will be covered in an article in the future.?

The author compiled data from various sources, including the U.S. Census Bureau, country-specific chambers of commerce, heat-treatment associations, and other publicly available industry data. Some conclusions are based on the author's expert analysis and judgment.

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First, we need to recognize an important statistic that has sparked much discussion. The total global heat-treating market is growing slowly in emerging markets such as India, Mexico, and Indonesia while remaining stagnant in major markets like the United States and the European Union. Notably, there is no sizeable movement in China's heat-treatment equipment market. The gain of one region or country for heat treatment is lost in another country or region.

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Amidst these challenges, there are promising areas of growth. The?aerospace, defense, and maintenance-repair-operations (MRO) industries are experiencing robust growth and a surge in demand for production capacity.

Secondly, we must confront the issue of heat-treating professionals' aging trends. Attracting the next generation of metallurgists, pyrometry experts, furnace operators, and maintenance teams demands our immediate attention. We need to better promote our industry and adapt to modern expectations to ensure a steady influx of new talent.

Third, we need to lower energy consumption, reduce carbon emissions, use renewable energy, and contribute to slowing climate change. These challenges spark innovation, demand efficiency, and offer opportunities to improve our processes.

Emerging Markets vs. Established Markets

My analysis begins with data collected by Statista (www.statista.com), a site that processes data from 170 industries across more than 150 countries. A large pool of manageable data sets can help us draw meaningful conclusions about our industry.

Let's compare Statista's estimate of the U.S. Gross Domestic Product to a sales growth report provided by the Metal Treating Institute, a body consisting of captive and commercial heat-treaters in the United States, international heat-treating partners, and associated suppliers.

Source: Statista [1]Source: Metal Treating Institute [2] The Metal Treating Institute, a non-profit trade organization for the heat-treating industry, is the leading trending and forecasting organization in the United States. If you would like more details on MTI's industry forecasts, contact MTI CEO Tom Morrison at?[email protected].

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When we look at the 2008-9 recession and the 2020 COVID epidemic alongside the market rebounds in 2011 and 2022 on both graphs, it reveals how the overall U.S. GDP trends are mimicked as sales growth in the metal treatment industry. It seems very reasonable that demand for products in general will create a demand for heat-treatment production.?

What's surprising, though, is that the production of new furnaces does not have the same correlation.

Source: Statista [3]Source: Statista [4]

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Even though the U.S. GDP almost doubled between 2010 and 2020, the total shipment volume of industrial furnaces and ovens only slightly increased, most likely mimicking the increased cost of operations and not market growth. Heat-treating companies are looking for lower labor and operations costs. This has led to a migration of manufacturing from the northern U.S. to the south, where labor and land are less expensive. The movement from high-cost to lower-cost countries is evident on a global scale.

Established industry standards such as AS (Aerospace Standard), EN (European Norm), JISQ (Japanese Institute for Standard Quality), AMS (Aerospace Material Specification), NADCA (North American Die Casting Association), as well as company-specific engineering standards, ensures that the heat treatment operation can be transferred and implemented to manufacturers in China, Singapore, Poland, India, Saudi Arabia, Vietnam, Philippines, Brazil, Thailand, and the UAE.? Those facilities can supplement and, in some instances, replace the U.S. Japanese and European heat treatment facilities.

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Nadcap (National Aerospace and Defense Contractors Accreditation) is a certification program that, if implemented with the AS9100 Quality system, ensures that any company can perform heat treatment for aerospace companies regardless of location. The Nadcap audit and AS9100 ensure that all engineering specifications are correctly understood, accounted for, verified, and recorded.?

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Most Southeast Asian companies are transplants established by U.S., European, and Japanese aerospace companies. The new trend is the expansion of Chinese manufacturing companies throughout Southeast Asia, with a corresponding expansion of Chinese furnace manufacturers to those markets.

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There are growing heat-treatment industries in Indonesia, Brazil, Mexico, and the Philippines, while more vacuum furnace operations are emerging in India, Singapore, South Korea, and Malaysia.

The globalization of heat treating will take advantage of emerging markets to lower costs, looking for an outlet valve to offset rising costs in the developed markets. Manufacturing globalization is here to stay and will grow regardless of political trends or slogans.

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Making Vacuum Furnaces that Meet Market Demands

There is a looming aging problem in the heat-treating industry. While many smaller heat-treating companies in the U.S. are entering their third generation of ownership, not every member of the younger generation aspires to take over the company. This trend is also very noticeable in Japan—there are 270,000 small—and medium-sized companies with owners aged 75 and older and no successors to take over.

Recruiting talent to enter the heat-treating industry is more complicated now than ever. Many people outside the industry have outdated ideas about heat-treating careers. Poorly informed students imagine dirty facilities with furnaces belching fire into the air—heat and sweat, chemicals and gases, hard work, and long hours in sooty clothes.

First-time visitors to a modern vacuum furnace cell would be stunned. Clean machines operate in well-organized plants, and automated systems handle large and small parts. Computers handle the brunt of controlling temperatures, pressures, and recipes, while operators, with the help of automation, take care of loading, unloading, monitoring, and maintenance.

As an industry, we need to explain what we do better to the next generation. The next generation of workers has different expectations. They're looking to work with intuitive, reliable machines, handle most of the heavy work, be easy to troubleshoot and interact with immediate feedback.

When ordering parts, the next generation has been taught to use searchable portals like Amazon, which have images of their inventory, allow instant online ordering, and offer a rapid turnaround from the point of sale to delivery.

Ipsen is working towards meeting those expectations. With PdMetrics?, we're incorporating a more innovative feedback interface. By looking for ways to bring important events to the forefront, PdMetrics? allows operators to respond better when unexpected situations arise mid-process. We're pursuing machine learning to help us push the PdMetrics? platform beyond descriptive data, offering data aimed at providing operators with the ability to better diagnose issues, with an eye on creating better predictive models as we develop this software. At the same time, Ipsen has invested in the Ipsen Connect online platform, offering furnace owners a more robust place to find schematics, identify parts, and place orders. Ipsen Connect is particularly helpful when replenishing consumables and frequently replacing spares.

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Our customers demand these innovations, and furnace manufacturers need to make the corporate investments necessary to compete in a highly competitive marketplace.

And yet, we need to go further. It's our mission to continue looking for more ways to ease operators' burdens by showing expertise beyond simply manufacturing the furnaces and shipping them to the end user. As we strive to continue being the market leader, we must improve our data delivery systems to go beyond merely diagnostic data, become exceptional at predictive information delivery, and develop robust prescriptive responses. We need to keep working on delivering expertise, not just equipment.

Get Behind Green Initiatives

Whether or not heat-treating professionals believe that climate change is real, that the actions of industrialized humanity cause it, or that it will have a significant impact on the future of our planet doesn't matter in the current marketplace. Every company needs to know how their work will survive the latest regulations.

Heat treatment is the most energy-intensive process in most production plants. Even small efficiency changes in our industry can significantly reduce a company's overall energy consumption. The rising energy costs alone are reason enough to pursue sensible efficiency innovations.

One thing that detractors often overlook when finding ways to meet green initiatives is that there are opportunities everywhere for innovation and improving efficiency. Market leadership means innovation. Ipsen constantly looks for ways to outdo our competition and remain on top.

In 2024, Ipsen received the German Innovation Award from the German Design Council for ATLAS Green, an atmosphere furnace designed to process parts using heat generated from hydrogen and green electricity, with the flexibility to prioritize whichever source is most abundant for the customer. Ipsen's TITAN line has been optimized to provide a robust set of processes while operating within a compact footprint, using a design that makes shipping easier and minimizes setup time and costs.

Manufacturers are also looking for new ways to reduce costs, inevitably affecting the heat-treating marketplace.

Take, for example, weight reduction. In particular, the transportation and aerospace industries are looking for opportunities to replace current materials with lighter-weight materials, provided they can deliver the same qualities and durability. Innovations like additive manufacturing create lighter components to work with, while the growth of the electric vehicle market means fewer parts to manufacture and process.

In the case of EVs, reducing the overall power drive train from 2000 parts to 200, featuring transmissions with two gears instead of eleven, can reduce the cost of manufacturing a vehicle and the motor's overall weight. As the EV market competes with internal combustion engines, demand for case-hardening engines may diminish, especially for large pusher-type furnaces.

On the other hand, Boeing and Airbus are moving their fleets from a metal fuselage structure to more composite and AM (Additive Manufacturing) components to reduce weight.? This trend will increase demand for composite and AM heat treatment. Titanium has always been the metal of choice in aerospace, a trend that will continue to increase demand for the beta-annealing process for titanium alloys such as Ti-5553. Demand for sintering furnaces and HIP (hot isostatic pressing) processes may rise to meet the growing additive manufacturing and powdered metal markets.

Furnaces capable of processes with lower operational temperatures, creating less distortion, are in high demand. Demand for copper processing is growing very fast due to global electrification, power transmission, and the electric power needs of global data processing centers.

Looking Ahead

Understanding these larger market forces can help our industry better prepare for what is to come in the heat-treating marketplace. Furnace manufacturers cannot afford to fall behind the trends; innovation and low cost, supported by the company's internal operational efficiencies, will win the day.?

This year, take your time to plan beyond 2025. Look at your industry trends and how your company compares to your competitors. Talk to your human resources team and determine what candidates are applying for your entry-level positions. Look at your energy bills and compare them to your profit margins.

Then, find ways to invest in the future. Look for opportunities to grow through expansion and acquisition. Find opportunities to improve energy consumption efficiencies. And invest in education, whether through a robust internship program or a collegiate scholarship partnership.

The opinions presented in this paper are solely those of the author and do not necessarily reflect the views or beliefs of Ipsen or its affiliates. All statements and perspectives are entirely the author's own.

References

[1] Statista. "Annual Gross Domestic Product (GDP) Growth of the United States from 1990 to 2024." Statista, 2024.?https://www.statista.com/statistics/188165/annual-gdp-growth-of-the-united-states-since-1990/.

[2] MTI (Metal Treating Institute). Forecast Report February 2024. Prepared by ITR Economics. MTI, 2024.

[3] Statista. "U.S. Industrial Process Furnace and Oven Manufacturing – Shipment Value Forecast 2012-2024." Statista, 2024.?https://www.statista.com/forecasts/310979/us-industrial-process-furnace-and-oven-manufacturing-shipment-value-forecast-naics-333994.

[4] Statista. "Gross Domestic Product of the United States from 1990 to 2022." Statista, 2024.?https://www.statista.com/statistics/188105/annual-gdp-of-the-united-states-since-1990/.